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Could Help to Buy push down rents?

Could Help to Buy push down rents?

Category: Mortgages

Updated: 16/10/2013
First Published: 16/10/2013

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The early launch of the mortgage guarantee element of Help to Buy could drive down London rents by up to 5%, a leading estate agency has claimed.

The Help to Buy scheme has been designed to help more first-time buyers get onto the property ladder with a small deposit, and that means many will be freeing up rental accommodation. That, in turn, will create a surge in the number of rental properties available with landlords potentially lowering their rates in order to compete.

Chesterton Humberts believe this could amount to as much as a 5% drop. They've based their figures on the three-year lifespan of Help to Buy, estimating that London rents will fall by an average of 1.5% every year as more people turn to homeownership and step out of the long-term rental market.

Richard Davies, residential operations director at Chesterton Humberts, commented:

"More landlords may find their tenant(s) giving notice as they move away from the private rented sector and into home ownership. Dependent on the scale of first time buyers taking advantage of the Help to Buy scheme, this could seriously impact the number of rental properties coming to the market for re-letting which could in turn see rental levels fall."

It's good news for renters, but experts warn it could have the opposite effect for prospective homeowners where the increased demand for properties could potentially push up house prices.

What Next?

Moneyfacts guide to Help to Buy: Mortgage Guarantee

Moneyfacts guide to Help to Buy: Equity Loan

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